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China cannot afford further delay of State IV emissions standards implementatio

The government is determined to make the conditions right for State-IV emissions standards implementation. All signs seem to point to the national implementation of the State-IV emissions standards once and for all by yearend.

During his government work report on March 5 at the annual National People’s Congress, Premier Li Keqiang said State-IV-compliant diesel fuel will be provided nationally by yearend. Liu Hanru, chairman of CAMC Hualing Automobile Co., Ltd. and NPC member, also predicted that State-IV emissions standards for diesel vehicles will be effective by yearend. “The government should make it clear the effective date of implementation of the new standards as well as when State-IV diesel fuel will be provided, and not make it a guessing game for the OEMs,” said Liu. “A strict reward and penalization mechanism for OEM implementation of State-IV emissions standards should also be established.”

Although enterprises and customers have been supporting the implementation of the new standards, the effective date has been postponed several times in the last four years due to controversies and disputes between different interest groups and government departments.

The Ministry of Environmental Protection (MEP) announced to implement the State-IV emissions standards on July 1, 2013 without mutual support from the Ministry of Industry and Information Technology (MIIT). The result was that State-III-compliant trucks could still be registered, thanks to permission from the MIIT.

To the MEP, it is urgent for the new standards to go into effect in order to tackle China’s worsening air pollution. To the MIIT, however, the continued delay of the standards was in inconsideration of lack of quality diesel fuel and AdBlue infrastructure.

China Association of Automobile Manufacturers (CAAM) came up with a compromise after research and suggested that State-IV emissions standards be implemented on January 1, 2014. The proposal was reportedly sent to the vice premier level for approval. But the government ministries still have not come to an agreement.

As a result, wastes were seen in inventory, capacity and management due to the unclear effective date of the new standards.

According to Gary Huang, president of Dongfeng Commercial Vehicle Co., (DFCV), the company believed that the implementation would be enforced on January 1 and therefore did not stock State-III-compliant trucks. But it has lost market share so far this year because of insufficient inventory of State-III trucks, according to a report on find800.cn.

“Since State-III trucks can still be registered in Beijing, a large number of State-IV-compliant trucks were sitting idle in our parking lot,” said Yao Li, chairman of Huaxia Shuanglong Automotive Trade Co., Ltd., the largest dealer of DFCV in Beijing. “As long as State-III trucks can be registered, customers would prefer to purchase those rather than State-IV trucks,” said Yao.

The MEP wanted to implement State-IV emissions standards as early as January 1, 2009. Because of this, U.S. engine manufacturer Cummins invested a plant focusing on post-treatment equipment of engines in 2008, Peng Lixin, vice president of Cummins China, told find800.cn in a recent report.

The plant never started production because the State-IV emissions standards never became effective, according to Peng.

SAIC Fiat Powertrain Hongyan Co., Ltd., a leading diesel engine JV, ceased getting certifications for State-III-compliant trucks and focused on the certification of State-IV emissions standards-compliant ones after it went into operation in 2007. However, production capacity was not utilized well given minimal sales volume of State-IV trucks.

A large number of enterprises manufacturing commercial vehicles, engines, engine components, post-treatment systems, and AdBlue products adjusted their production planning based on the original implementation time of 2009. However, the postponement of effective implementation dates meant a heavy blow to them: millions of RMB were wasted in R&D, certification and parts components supply.

Automakers nowadays tend to cut down on the number of product ranges and platforms. However, the long-term coexistence of State-III and State-IV trucks has largely added management costs. Vehicle manufacturers have to prepare two different systems for auto parts, inventory, assembly, product catalog, pricing and discount to meet customer demand. The invisible management cost also leads to meaningless waste in time and energy.

The State-IV emissions standards and implementation have been a long-term concern to truck OEMs, dealers and customers, one that all parties hope can end this year. After all, China cannot afford a further delay of State-IV emissions standards implementation.

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